"CLOSED" MEANS "CLOSED": USAID DEMOCRACY PROGRAMS TO CEASE OPERATIONS

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09LAPAZ1239 27 August 2009 Confidencial Embassy La Paz

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C O N F I D E N T I A L LA PAZ 001239

SIPDIS

INL PASS TO FRANCISCO PALMIERI

E.O. 12958: DECL: 08/27/2019
TAGS: EAID, KDEM, PGOV, PINR, PREL, SNAR, BL
SUBJECT: "CLOSED" MEANS "CLOSED": USAID DEMOCRACY PROGRAMS
TO CEASE OPERATIONS

REF: A. LA PAZ 1220
B. LA PAZ 1027
C. LA PAZ 1142
D. LA PAZ 1111
E. LA PAZ 1062
F. LA PAZ 1043

Classified By: Charg d’Affaires John Creamer for reasons 1.4 (b, d)

1. (C) SUMMARY: Charg d’Affaires Creamer met with Foreign
Minister David Choquehuanca and Deputy Foreign Minister Hugo
Fernandez on August 24 to discuss their previous agreement to
"suspend" rather than "close" USAID democracy programs
(REFTEL A). The meeting was prompted by an August 18 GOB
letter instructing us to close our democracy programs
immediately. Fernandez confirmed to Charg that after
consultations with Planning Minister Noel Aguirre, Foreign
Minister Choquehuanca, and Bolivian Ambassador to the UN
Pablo Solon, the GOB has decided that these programs must be
closed down within 90 days. END SUMMARY.

2. (C) Charg d’Affaires met with Foreign Minister
Choquehuanca and Vice Foreign Minister Fernandez on August 24
to discuss the suspension of USAID democracy programs.
Whereas the Foreign Minister and representatives from the
Planning Ministry had previously indicated that only a few
USAID programs within the democracy component of USAID’s
Democracy and Governance portfolio would be suspended, in an
August 17 letter, Planning Minister Noel Aguirre instructed
that USAID’s democracy, public administration, and dispute
resolution programs be closed. (Note: USAID had previously
suggested to the GOB that the public administration and
dispute resolution programs be considered outside the
democracy component, both for thematic reasons and because
the GOB previously requested that these programs, which
include the Integrated Justice Centers, municipal
strengthening work, and election monitoring, continue. End
note.)

3. (C) Fernandez said the earlier understanding that the
programs need only be "suspended" assumed that the bilateral
dialogue process would proceed more rapidly than it has, and
that those talks would provide a forum for discussion of the
overall framework for U.S. assistance programs. The GOB
believes that the dialogue has not moved forward because of
delays in the confirmation of A/S-designate Arturo
Valenzuela. Fernandez said that without progress, the GOB is
willing to incur the political cost of closing some USAID
programs. He also voiced frustration that the U.S.
counterproposal to the GOB did not refer to the GOB’s
proposal that all USG assistance should be state-to-state,
rather than through nongovernmental organizations.

4. (C) Charg voiced his disappointment over the GOB’s
decision and noted that prior agreements stipulated that the
GOB provide a three-month grace period for closing out
programs. Fernandez said the GOB started the three month
clock when the first Aguirre letter was delivered on July 9
(REFTEL B). Fernandez offered to send a diplomatic note,
which the Charg agreed would be helpful. Charg indicated
that upon receipt of the note, USAID would contact the
Planning Ministry to coordinate the program closures. USAID
intends to close out the affected programs within 90 days of
receipt of the diplomatic note. (Note: USAID has program
implementation contracts which require advance cancellation
notice. End note.)

5. (C) USAID currently has about $4.8 million in the
democracy and governance portfolio "pipeline" to implement
current projects (including obligated funds and funds now
being spent) and had planned to obligate an additional $11
million before the end of FY09 to implement future
activities, many of which were directly requested by the GOB.

Post intends to meet with the World Bank and other donors
and interested parties to inform them of the GOB’s decision.

6. (C) Comment: Similar to events prior to the ATPDEA
announcement, we believe the GOB is playing hardball on the
assistance issue in an effort to position itself to win no
matter what happens with our bilateral dialogue. If the
dialogue proceeds, the GOB will claim victory. If the talks
break down, it will be our fault. We also suspect that GOB
hardliners such as Presidency Minister Quintana — who have
always opposed the talks — are pushing to heighten tensions
before our September 15 certification announcement, believing
that will offer a perfect pretext for ending the dialogue.
CREAMER